Sunday, January 9, 2011

When Bill Clinton was first made president, he promised to revamp the economy along the lines of Roosevelt's first 100 days. Of course, nothing of the kind happened. Since this is USA where historical illiteracy is considered normal and acceptable, I just assumed that Clinton's first 100 days were so insignificant by comparison because he didn't actually understand FDR's accomplishments.

That explained the Big Dog to some extent, but I wasn't much satisfied that historical illiteracy explained it all. Far from it. There is also the problem that the institutions in USA have grown so large and ponderous since the 1930s, any change at all is at least an order of magnitude more difficult. This not only applies to redesigning social programs, it applies to hardware like military aircraft. For example, the P-51 Mustang fighter, WW II's most successful fighter plane, went from drawing board to flying in only 117 days. Now it takes decades to design a new fighter plane.

When Obama was elected on a slogan of "hope and change" during the greatest economic catastrophe since the 1930s, one would have assumed that a new economic agenda was forthcoming--you know--change. But even though Obama is a known historical illiterate and the institutions in USA are even MORE ossified than when Clinton was elected, these factors still don't explain much. Because the BIG element missing from today's debates are the ideas and pressure groups that led to FDR's reforms.

I mean, think about it for a minute. We are facing problems that require that we must literally rebuild and redesign our whole infrastructure to operate on something other than petroleum. We have a VERY short time to accomplish this monumental task. And yet, we are letting idiots tell us that their "economics" require we do nothing while millions are out of work.

This is happening because the left--the people who are supposed to show up with the big plans and the big frontal lobes to create those big plans--spent the last 35 years ignoring economics so they could concentrate on such slacktivist projects as wearing "meaningful" rubber bands on one's wrist, organizing marches with giant puppets, or walking long distances to fight cancer. Why tackle serious projects when there really are "50 easy ways to save the planet?"

When FDR took office, there were dozens of well-thought-out projects ready to roll created by serious people who had done serious thinking. Now the big political voices are simply ridiculous. Watch Glenn Beck for about 3 minutes and you too will be muttering about how the Enlightenment was wasted on him. But forget the crazy right wing--they have always been Glenn Beck insane. They are humanity's reptilians, after all. The problem is that the folks who should know better are almost as irrelevant.

So nothing will change until we Progressives stop being irrelevant.

Zombie Economics and Just Deserts: Why the Right Is Winning the Economic Debate

Eric Schoenberg

Associate Director, Center for Decision Sciences, Columbia Business School

Posted: January 7, 2011 06:54 PM

Economist Paul Krugman recently decried "zombie economics," policies advocated by "free-market fundamentalists [who] have been wrong about everything yet now dominate the political scene more thoroughly than ever." I share his chagrin, but suggest that the problem is that Krugman was wrong to also assert that "economics is not a morality play." In fact, I believe that defeating the zombie-like resilience of laissez faire capitalism will require directly refuting the moral belief in the inherent fairness of free market outcomes.

Consider a recent suggestion by Harvard economist Greg Mankiw, former Chairman of George W. Bush's Council of Economic Advisors, that tax policy should be based on a "Just Deserts Theory" under which "people should get what they deserve." This principle, a restatement of Equity Theory, proposed by psychologist John Adams in 1963 to explain how people evaluated distributional fairness, has long played a central role in tax debates, and is one that I, like many liberals, heartily endorse. Indeed, I think that widespread support for free markets is based more on belief in their inherent morality than on belief that they promote economic growth, potentially explaining the religious fervor of free-market fundamentalists defending their faith despite the considerable counter-evidence provided by recent events.

Mankiw concisely summarizes the theory underlying the ethical argument for market capitalism: "under a standard set of assumptions... the factors of production [i.e., workers] are paid the value of their marginal product... One might easily conclude that, under these idealized conditions, each person receives his just deserts." Mankiw's long-standing opposition to higher taxes on the wealthy suggests that he thinks these conditions usually pertain in the real world, too.

Consider me skeptical. The list of "standard assumptions" open to question is long, but two are particularly problematic (Northwestern economist Jonathan Weinstein has critiqued several others). First, how can we be sure that marginal productivity is the same as social contribution? A safe cracker in a criminal gang may indeed receive loot equal to his marginal productivity, but this doesn't mean that he is creating social wealth. Thus, financial industry profits accounted for over 40 percent of all corporate profits in 2004-5, but does anyone seriously contend that Wall Street created (rather than redistributed) 40 percent of wealth during that period? more

Hell, we can't even defend the good ideas of the old Progressives.

The End of New Deal Liberalism

William Greider (William Greider, a prominent political journalist and author, has been a reporter for more than 35 years for newspapers.)

January 5, 2011 | This article appeared in the January 24, 2011 edition of The Nation.

We have reached a pivotal moment in government and politics, and it feels like the last, groaning spasms of New Deal liberalism. When the party of activist government, faced with an epic crisis, will not use government's extensive powers to reverse the economic disorders and heal deepening social deterioration, then it must be the end of the line for the governing ideology inherited from Roosevelt, Truman and Johnson.

Political events of the past two years have delivered a more profound and devastating message: American democracy has been conclusively conquered by American capitalism. Government has been disabled or captured by the formidable powers of private enterprise and concentrated wealth. Self-governing rights that representative democracy conferred on citizens are now usurped by the overbearing demands of corporate and financial interests. Collectively, the corporate sector has its arms around both political parties, the financing of political careers, the production of the policy agendas and propaganda of influential think tanks, and control of most major media.

What the capitalist system wants is more—more wealth, more freedom to do whatever it wishes. This has always been its instinct, unless government intervened to stop it. The objective now is to destroy any remaining forms of government interference, except of course for business subsidies and protections. Many elected representatives are implicitly enlisted in the cause.

A lot of Americans seem to know this; at least they sense that the structural reality of government and politics is not on their side. When the choice comes down to society or capitalism, society regularly loses. First attention is devoted to the economic priorities of the largest, most powerful institutions of business and finance. The bias comes naturally to Republicans, the party of money and private enterprise, but on the big structural questions business-first also defines Democrats, formerly the party of working people. Despite partisan rhetoric, the two parties are more alike than they acknowledge.

In these terms, the administration of Barack Obama has been a crushing disappointment for those of us who hoped he would be different. It turns out Obama is a more conventional and limited politician than advertised, more right-of-center than his soaring rhetoric suggested. Most Congressional Democrats, likewise, proved weak and incoherent, unreliable defenders of their supposed values or most loyal constituencies. They call it pragmatism. I call it surrender. more

The following is well worth reading. It's damn shame it needed to be written.

No, the Jobs Crisis Isn't Over: What's the Progressive Plan?

Les Leopold

Author, "The Looting of America"

Posted: January 7, 2011 09:30 AM

According to the Associated Press: "The nation's unemployment rate dropped to 9.4 percent last month, its lowest level in 19 months. That was because more people found jobs, but also because some people gave up on their job searches."

It's time to stop kidding ourselves. Despite the rise of private employment in December, the jobs crisis isn't over. While the narrow measure of unemployment is 9.4 percent, the more telling jobless rate also compiled by the Bureau of Labor Statistic (U6) is 16.7 percent.

Meanwhile, the country is careening to the right and progressives are partly responsible. We can cry all we want about the distortions of Fox News, Rush, Palin and the Republicans in Congress, but the truth is that progressives (liberals, the left or whatever you want to call us) lack the compelling, coherent vision we need to deal with the enormous unemployment crisis.

Stop for a moment and ask yourself: Just what is the left's plan to create the 22 million full-time jobs we need to get back to a 5 percent unemployment rate (the going definition of full employment)? Where's our plan for creating the equivalent of 650 corporations the size of Apple, each employing about 35,000 people? Do we really think it's enough to beg the Republicans for a larger stimulus program?

So... where's the plan? There may be bits and pieces of it lying about, but there's no widely discussed and shared vision that progressives can claim as their own. We have nothing to compete with the right's mantra of shrinking government, stamping out regulations and cutting taxes, (especially for the well to do.)

Why is that? Whatever happened to the left's focus -- even obsession -- on the economy? Over the past generation most progressives have stopped talking about alternative economic visions. How different this is from a century ago. At the turn of the 20th century, radicals of all stripes had competing blueprints for creating a more equitable society that would upend the gilded age's concentration of power and wealth.

Those who believed in socialism saw state ownership and central planning as the answer. Others favored a society of producer cooperatives. Many more, including lots of government officials and academics, called for a mixed economy with a strong emphasis on bringing up the bottom through social security, the minimum wage, wage and hours legislation, unemployment insurance and socialized health care. No matter what kind of progressive you were, no matter your issue area of work, you had a plan for the overall economy.

So when the Great Depression hit, there was no shortage of ideas for how to retool America. Much of the Socialist Party platform from a decade earlier morphed into the New Deal. The freshly minted Tennessee Valley Authority created a regional planned economy, bringing a devastated rural area into the modern world. And of course, the government put shackles on Wall Street, which kept it from playing its dangerous speculative games and upending the economy for the next 50 years.

God knows the 1960s spawned another wave of alternative everything -- including economics. As part of the youth rebellion, all kinds of cooperative projects sprang up -- from collectively run businesses to communal farms. Some of these survived and even flourished. But most of that progressive energy evolved (or diverged) into a number of specific and often successful movements for change in everything from gender roles and identity to media, health, education, and the environment.

Meanwhile, alternative big-picture economics just about dropped out of view (except for a rump group of radical economists who got into academia and focused most of their energy there). I recall many discussions with progressive organizers during the 1970s and 1980s about how we needed to keep some focus on macro-economics -- the rising concentration of wealth, the growth of giant corporations, the rising power of fiance. But, most progressives warned me that such conversations were irrelevant to the "real" day-to-day organizing we had to do. Focus on short-term winnable issues, I was told. By the 1990s and 2000s, most of us were firmly planted in our issue silos (healthcare, education, the environment, labor), doing good, practical work in our unions and nonprofits and government hideaways. But, talking about large-scale economic reform was considered pie in the sky. more

Using a sports metaphor to describe the obvious.

Politics vs. Sports?

No Contest

By RUSSELL MOKHIBER January 6, 2011

[snip]

Increasingly, Americans are starting to realize that — on hard core economic issues — both Republicans and Democrats are playing for the same owner.

Good lord, if the French can revive political thinking with 13 pages of text, we are going to have to get it down to about three pages in USA. (sigh)

The little red book that swept France

The latest call to (non-violent) arms has turned a 93-year-old war hero into a publishing phenomenon. John Lichfield reports

Monday, 3 January 2011

Take a book of just 13 pages, written by a relatively obscure 93-year-old man, which contains no sex, no jokes, no fine writing and no startlingly original message. A publishing disaster? No, a publishing phenomenon.

Indignez vous! (Cry out!), a slim pamphlet by a wartime French resistance hero, Stéphane Hessel, is smashing all publishing records in France. The book urges the French, and everyone else, to recapture the wartime spirit of resistance to the Nazis by rejecting the "insolent, selfish" power of money and markets and by defending the social "values of modern democracy".

The book, which costs €3, has sold 600,000 copies in three months and another 200,000 have just been printed. Its original print run was 8,000. In the run-up to Christmas, Mr Hessel's call for a "peaceful insurrection" not only topped the French bestsellers list, it sold eight times more copies than the second most popular book, a Goncourt prize-winning novel by Michel Houellebecq.

The extraordinary success of the book can be interpreted in several ways. Its low price and slender size – 29 pages including blurbs and notes but just 13 pages of text – has made it a popular stocking-filler among left-wing members of the French chattering classes. Bookshops report many instances of people buying a dozen copies for family and friends.

But Mr Hessel and his small left-wing publisher (which is used to print runs in the hundreds) say that he has evidently struck a national, and international nerve, at a time of market tyranny, bankers' bonuses and budget threats to the survival of the post-war welfare state. They also suggest that the success of the book could be an important straw in the wind as France enters a political cycle leading to the presidential elections of May 2012. more

And yet again--we ought to be getting SOME points for being right!

Joe Stiglitz, Paul Krugman, Simon Johnson, Robert Reich: The liberals were right

by Brent Budowsky | January 8, 2011 - 10:35am

The Obama stimulus created jobs, but not enough jobs and not fast enough. The charges from the Republican right are clearly wrong. Even most serious conservative economists who did not like the stimulus agree it created some jobs, and more jobs than would have been created without it.

The economic advocates who were the most clearly right, in retrospect, were Democratic liberal and populist economists who favored a larger and stronger stimulus, more job-creating public works in a larger overall stimulus and far stronger reform of financial institutions.

Stiglitz, Krugman, Johnson and Reich had slightly differing variations on the same theme: Without a larger program and stronger financial reform, the economy would improve, but slowly and with significant risk to the future. Their forecasts of what would happen were almost exactly correct.

Our debate has been warped, because these progressive economists, while far more right in retrospect than others, did not have the voice equal to their good judgment and innovative policies.

The Republicans and the right of course demean anyone with different views, and even deny basic facts and data and science on issues ranging from global warming to economic policy. Their repeal of healthcare would balloon the deficit by $230 billion, according to the Congressional Budget Office, so they just deny it. The same way they deny the obvious fact that the Obama stimulus did create jobs.

The Democrats are impeded by the fact that the White House largely ignored or demeaned the views of Stiglitz, Krugman, Johnson and Reich (and yours truly). Therefore the real progressive economic policies were never attempted in fact. more